§8-1503. Property interest of entitlement holder in financial asset held by securities intermediary

(1).
To the extent necessary for a securities intermediary to satisfy all security entitlements
with respect to a particular financial asset, all interests in that financial asset
held by the securities intermediary are held by the securities intermediary for the
entitlement holders, are not property of the securities intermediary and are not subject
to claims of creditors of the securities intermediary, except as otherwise provided
in section 8-1511.

[
1997, c. 429, Pt. B, §2 (NEW)
.]

(2).
An entitlement holder's property interest with respect to a particular financial
asset under subsection (1) is a pro rata property interest in all interests in that
financial asset held by the securities intermediary, without regard to the time the
entitlement holder acquired the security entitlement or the time the securities intermediary
acquired the interest in that financial asset.

[
1997, c. 429, Pt. B, §2 (NEW)
.]

(3).
An entitlement holder's property interest with respect to a particular financial
asset under subsection (1) may be enforced against the securities intermediary only
by exercise of the entitlement holder's rights under sections 8-1505 to 8-1508.

[
1997, c. 429, Pt. B, §2 (NEW)
.]

(4).
An entitlement holder's property interest with respect to a particular financial
asset under subsection (1) may be enforced against a purchaser of the financial asset
or interest in the financial asset only if:

(a). Insolvency proceedings have been initiated by or against the securities intermediary; [1997, c. 429, Pt. B, §2 (NEW).]

(b). The securities intermediary does not have sufficient interests in the financial
asset to satisfy the security entitlements of all of its entitlement holders to that
financial asset; [1997, c. 429, Pt. B, §2 (NEW).]

(c). The securities intermediary violated its obligations under section 8-1504 by transferring
the financial asset or interest in the financial asset to the purchaser; and [1997, c. 429, Pt. B, §2 (NEW).]

(d). The purchaser is not protected under subsection (5). The trustee or other liquidator,
acting on behalf of all entitlement holders having security entitlements with respect
to a particular financial asset, may recover the financial asset, or interest in the
financial asset, from the purchaser. If the trustee or other liquidator elects not
to pursue that right, an entitlement holder whose security entitlement remains unsatisfied
has the right to recover its interest in the financial asset from the purchaser. [1997, c. 429, Pt. B, §2 (NEW).]

[
1997, c. 429, Pt. B, §2 (NEW)
.]

(5).
An action based on the entitlement holder's property interest with respect to a
particular financial asset under subsection (1), whether framed in conversion, replevin,
constructive trust, equitable lien or other theory, may not be asserted against any
purchaser of a financial asset or interest in a financial asset who gives value, obtains
control and does not act in collusion with the securities intermediary in violating
the securities intermediary's obligations under section 8-1504.

[
1997, c. 429, Pt. B, §2 (NEW)
.]

SECTION HISTORY

1997, c. 429, §B2 (NEW).

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